Berry Smith, one of Wales’ leading law firms, has today welcomed Government changes to the Civil Justice system that will benefit businesses throughout the UK.
Due to the previous system being cost and time consuming, the Government’s announcement proposes two significant changes to ensure business disputes are quicker and cheaper to resolve.
The most significant change will be an increase of the financial limit for the Small Claims Court. The new limit will be extended to cases worth up to £10,000, a doubling of the current limit, with a future intention to increase the limit to £15,000.
Judges will also have the power to refer higher-value business disputes to the Small Claims track without the consent of the parties.
A significant feature of the Small Claims Court is that parties can only recover limited fixed legal costs from their opponent if their case is successful. Consequently, a party has to bear most of the costs it incurs itself.
The Small Claims Court has traditionally dealt with a large number of lower-value business disputes; the increase in financial limit will mean that a greater number of cases will fall into its jurisdiction.
A second change announced is the more prominent role of mediation, a process which attempts to resolve disputes outside of court, in civil disputes.
Significantly, for the first time, the Government will adopt a compulsory and automatic referral to mediation for all cases falling within the Small Claims limit. As a result, a disputed case cannot proceed to a final hearing before the parties have engaged in discussions with a mediator.
By making mediation compulsory, companies can save in legal court costs and limit the resources and management time that would be involved in a long running dispute. Furthermore, a business stands a much greater chance of preserving its business relationship with its opponent, if an agreement can be reached, without relying upon the courts.
Nick Parker, Head of Dispute Resolution at Berry Smith, commented: “It has been long acknowledged by lawyers and business leaders that changes needed to be made to the civil justice system, due to the amount of time and costs involved with dispute cases.
“With the focus on mediation it is not hard to foresee that, if the changes prove successful, then an automatic referral to mediation will be extended to higher-value disputes. There will also be a cultural shift as businesses grow further accustomed to the use of mediation and its benefits. These changes, then, will be extremely well received by businesses across England and Wales.”